December 19, 2008

Dramatic Collapse of the American Auto Industry

After the American Century

]Update: In 1212 I can look back and see that the Obama Administration did save GM and Chrysler. Not only that, but GMis once again the world's largest car maker. No thanks to the Republicans, however, who were ready to let Detroit die. However, this piece accurately reflects the apprehension and gloom that was widespread in the autumn of 2008.]

It is a dramatic story, the collapse of what used to be the core of American industry. A century ago the automobile industry was rapidly growing in Detroit, with many of the most dynamic companies long since forgotten. The Reo, the Hudson, and the Packard are long gone now. Yet what emerged by 1930 was not quite a monopoly but what came to be called "The Big Three" - beside which remained a few small fry another thirty years, such as Studebaker and Nash Rambler. But the Big Three seemed the stuff of industrial immortality - dominating the US market and expanding into foreign lands as well.

Curiously, the relative strength of the three is inversely related to their age. Walter Chrysler's company is the youngest, though that is not why it is now the weakest. General Motors came about as the merger of five automakers and surpassed the older Ford Motor Company (founded in 1903) to become the world's largest car company, a position it retained for decades.

This is not the place to analyze the gradual decline and fall of all three companies, which would take volumes. But none can doubt that these companies lost their technological edge, with many improvements coming from Europe and Japan. The latter particularly excelled at superior productive systems, requiring fewer workers to produce cars, and offering automobiles with far fewer production mistakes as well.

Yet the current malaise of the industry is also related to its poor leadership on environmental matters. Detroit executives have continually resisted pressures to raise the average miles per gallon of their fleet, and sought ways to escape legal requirements in this area altogether, notably by selling ordinary households SUVs and trucks. In the 1980s and 1990s, a time when less than 3% of all Americans are farmers, the sale of gas-guzzling trucks shot up. Meanwhile, Honda, Toyota, and other foreign producers not only produced more efficient cars, but they began to do so inside the United States.

As a result, where once American lawmakers would rally to support Detroit, today no one has much appetite for the job. Southern lawmakers often have a European or Japanese automobile plant in their state, and they also are typically keen on the idea of free market capitalism. Subsidies are not their way. Environmentalists are disgusted with Detroit's foot-dragging on pollution and car efficiency. The great middle class may be sympathetic to the plight of the workers, but they often own foreign cars themselves, and they suspect that the automobile magnates have made their own problem. Conservatives generally do not want to help the car companies unless they negotiate much less advantageous deals with labor. (In fact, the major cost of making cars is not labor, but this point is lost in most debate.)

Support for the automobile companies is strongest in the states where the jobs will disappear if they collapse entirely - Michigan, Ohio, Indiana, Illinois, and certain districts where assembly plants are located. But so far this local support has not been enough, and no clear plan has yet been developed to save the Big Three.

Worst of all, it is not easy to fix the problems these manufacturers face. It takes years to get from the blueprint of a new model to a factory producing it and a team of mechanics ready to service it. But the Big Three do not have years. GM and Chrysler are almost bankrupt now, and the billions they need will not come from banks. Ford is a little better off, and says it does not need federal money immediately. But the other two do, and even though they have closed down their plants for up a month at Christmas, their debt keeps increasing, because of all the retired autoworkers whose pensions must be paid, because corporate debt must be serviced, and because even non-productive factories have heating bills, insurance, and other fixed costs that keep running.

Meanwhile, the few consumers who are visiting automotive showrooms rightfully worry about purchasing any American car. What good is a guarantee if the company dies? Where are spare parts going to come from, if the manufacturer ceases to exist? This problem is going to get worse before it can conceivably get better. Yet with three million jobs on the line, the collapse of the car industry is just not an acceptable option for either state or national government.

The fate of the automobile companies is a close parallel to the fate of the "American century." We seem suddenly to be entering the afterlife of a once powerful economy.


December 16, 2008

How Bush Finally United the Iraqis

After the American Century

An Iraqi journalist has become famous because he took off his shoes and threw them at President Bush. This appears to have been a spontaneous action, or at least not thought out in advance. Had he really wanted to hit Bush with his shoes, he should have stood on one side, near the front, and waited until the president was looking the other direction. And he should not have shouted until the shoe was in the vicinity of the commander-in.chief's head. However, judging by the video. this appears to have been an emotional outburst, not a premeditated attack. Throwing a shoe is a traditional Iraqi way to insult a person, so the action makes more sense in that nation than it would in Europe or the US.

I do not find this incident surprising. Bush's mistaken and unnecessary invasion of Iraq has led to the deaths of huge numbers of civilians, perhaps 30 times as many as died in 9/11. This could make someone angry. Muntader al-Zaidi, the journalist, a 28 year old correspondent for Al Baghdadia, an Iraqi television station, was only a few rows away from Mr. Bush, when he slung his shoes, and shouted in Arabic: “This is a gift from the Iraqis; this is the farewell kiss, you dog!” He then threw the other shoe, shouting, "“This is from the widows, the orphans and those who were killed in Iraq!” Security police immediately subdued and arrested him. It appears that he was also beaten, which was hardly necessary.

Bush showed quick reactions and some agility in avoiding the flying shoes. But he will not be able to avoid being nailed by historians, even if his Administration did manage to lose (destroy?) large numbers of documents related to the invasion of Iraq.

The great majority of Iraqis, while divided by religion and much else, have embraced Muntader al-Zaidi's action, in a rare moment of unity. In any popularity contest, he is a "shoe in." Millions of Arabs all over the Middle East seem delighted with the idea of throwing shoes at President Bush, and the journalist has been widely praised for his courage. Is it possible that Bush has now united the Iraqi people in support of free speech and democracy?

December 11, 2008

What We Can Expect

After the American Century

We have all now heard about the Governor of Illinois trying to sell Obama's Senate seat to the highest bidder. Such an event is the perfect deflation device, bringing us back down to earth. The economy may be in meltdown mode and the world in peril from global warming, but politicians do not therefore become virtuous. No one thinks Obama has anything directly to do with this sorry mess, and indeed the FBI tapes reveal the Governor complaining that he could not get anything from the president-elect.

Nevertheless, as the United States confronts a major economic crisis, it would be nice if one sensed a corresponding urgent desire to do the right thing in the political class. But recall the venality of Congress just a few months back, when it attached billions of dollars of pork to the financial bailout package - and this was just before an election when the country was paying attention.

Obama has been around Chicago politics and Washington politics long enough to know that getting real change will not come easy. The vested interests will try to oppose reform of the medical system, pollution restrictions, and higher energy standards to make houses and cars more efficient. Obama has moved rapidly to name his Cabinet and make other key appointments, and they appear almost uniformly to be both bright and experienced. Even the don of the Republican insiders, Henry Kissinger, has praised the steam that is being assembled.

This team is more centrist than many of Obama's supporters might have liked, but politics is the art of the possible. In this crisis, one senses that more may be possible than normally would be the case. Much depends on how skillfully the Obama presidency sequences its legislative proposals. Ideally they will begin with the ideas that are hardest to oppose and build momentum. Ideally, they will not try to overwhelm the Republicans, but make a show of working with them, cajoling support from moderates on the other side of the aisle. If they get some major legislation through quickly with bipartisan support, then it might turn into a new version of Roosevelt's famous 100 days in the first months of his first administration. Press reports about Obama's history reading suggests that this is his scenario. Yet however beautiful the plan and however fine the team to carry it out, venal politicians like the Governor of Illinois can obstruct and unexpected events such as a foreign policy crisis can derail the Obama Express.

I temper my hopes with these realizations, but remain confidant that at the least we will have a president who is intelligent and knows the Constitution. We can with confidence expect that the Guantanamo prison will close, that the government will not systematically lie to the public about foreign policy, that vast troves of government documents in the form of White House emails will not again be lost, that the White House will not engage in political vendettas, that Civil Rights laws will be enforced, that Supreme Court nominees will be competent, and that pollution will be reduced. For the last eight years we could expect none of these things.

December 06, 2008

After the American Century's First Birthday

After the American Century

Now that the Obama presidential team is all but assembled, it is time to take stock. One year ago no one imagined that either Obama or McCain would be nominated. A month after the election, Obama has become a familiar beacon of hope to the American people and others around the world. We are in difficult times, and we hope his team will be able to deal with the many problems in inherits from the dysfunctional Bush Administration. I will continue to comment on events as they unfold.

This Blog has now existed a few days less than one year, and it has been far more interesting to me than I anticipated. In fact, I have written 133 blogs, and these have been read in 61 countries by thousands of people. But in the course of the year I have also found that the largest number of these readers - more than half - come from Denmark. The next largest group are in the United States. It is not surprising to anyone who surfs the net, that half of all site visitors come by for less than 10 seconds. But the geography of these casual visits is interesting: 75% of those from the US fall into that category. In contrast, just 25% of Danish (and Norwegian, Swedish, and German) visitors drop in for such a short time. 75% of them stay much longer and evidently are reading more of what appears here. Based on these statistics, provided by Google, in the future I will regard readers in northern Europe as my primary audience, and hope that those from North America (hello Canadian readers!) will be interested in such a viewpoint.

I should also add that I have been pleased with the occasional feedback, both in person and on line, and promise to continue this enterprise in 2009.

At this busy season, I am about to rush off to day of rehearsing, singing, and partying afterwards, and hope this finds you all similarly busy with Christmas.

November 23, 2008

Giving Pragmatism and Brains a Chance

After the American Century

The rapprochement between Hillary Clinton and Barack Obama apparently has been taking place since June. Clearly neither has such a sensitive ego that it prevents them from seeing the advantages of working together. I admit that I am surprised both that he would ask her to become his Secretary of State and that she would accept. I always thought that being a Senator, especially a high-profile Senator from a large state, was a better position than serving in the cabinet. Being Secretary of State is the most important job there, to be sure, but it is potentially only a four year run, and at best eight years. In contrast, Clinton has such a strong hold on her Senate seat that she could keep it for life.

So far, it seems that Obama's criteria for getting a post in his administration are that one has to be very smart, preferably with an Ivy League education, and not too much of an ideologue. He seems to prefer pragmatists who have Washington experience. He has drawn on many from the Clinton White House, which is not surprising, since to find other Democrats with such experience he would have to go back to 1980, the last year of Carter's administration. Most of his staff are now retired. As with all cabinets, this one almost assuredly looks better before it takes power that it likely will in four years time. But after eight years of ideologues and a less than brilliant president, surely it is time to give pragmatism and brains a chance. This will be novel for Washington lobbyists and for Fox News, not to mention any Republicans who still believe that Obama is a socialist.

As the appointment process proceeds, the contrast increases between the staggering economy and hope that the Obama will be able to turn it around. His announcement yesterday of a major economic stimulus package, ideally to be passed as soon as possible after January 20, clearly is calculated to hearten the market, and to help bridge the 8 week gap between now and the moment he assumes control. Call it "change they need to believe in." If the meltdown continues, Obama may inherit a nationwide crisis so palpable that his plans will be passed quickly. If the economy miraculously improves, he will presumably face a bit more opposition. But either way, I think we can expect passage of a stimulus package that features green energy technologies, tax cuts for the middle class, and incentives for industries to create jobs.

November 17, 2008

Obama's Restricted Freedom

After the American Century

There is a curious irony in President Barack Obama's e-mail situation. While a Senator he was glued to his Blackberry and emailed constantly. As President, it appears he will have to give up his freedom in cyberspace. Not only will official regulations require that all his official business be preserved for posterity, but also national security mandates that his emailing be restricted to harmless topics, if not cut off altogether.

The erosion of the line between public and private is a problem for all Internet users. Google can mine information on those who use its search engine, strangers can see photographs we post on Facebook, and huge amounts of personal information ends up on the WWW, often without the persons described, discussed or documented being aware of it. Therefore, the President has to become an intensely private person, with little or no personal presence on the Internet, however many official web pages and news stories there are about him or her.

In Obama's case this seems particularly ironic. More than any other candidate, he mastered the new media, and used it to raise money and coordinate his campaign. He apparently also used it to stay in touch with ordinary people - old friends whom he could trust to tell him what the buzz was on the street. E-mail gave him access to life beyond the bubble of celebrity and security. But now, for the next four, quite possibly eight years, Obama will enter a cocoon of cyber-isolation - or he may become a reader but not a sender of emails. One assumes he will still have a computer and that he will be able to surf the web, perhaps under a new assumed name each day.

The President is seen as the most powerful person in the United States, yet his movements are restricted, his contacts are monitored, his every decision recorded, and his email cut off. While there are compensations, to be sure, holding that office to a considerable degree restricts freedom and discourages spontaneity. For decades the President has not been able, on the spur of the moment, to jump in the car and go for an aimless, relaxing jaunt into the countryside. It seems the freedom to roam in cyberspace will be restricted as well.

But on the bright side, for at least four years Obama will not get any spam!

November 14, 2008

Ranking the States on Energy Efficiency

After the American Century

Energy is a central part of the announced Obama program, so it is useful to know which states (and their representatives in Congress) are most disposed to support him. A new report from the American Council for an Energy-Efficient Economy rates all 50 states, not in terms of their energy use per capita, but in terms of their utility regulations, transportation legislation, building codes and other laws that require or at least encourage better energy practices. The most conscientious states turn out to be those that Obama won, led by California and Oregon, and including New York, New Jersey, the New England States, Wisconsin, and Minnesota. These are quintessential "blue states" in other words, and they all receive scores of at least 25 out of a possible 50, California being the highest with 40.5.

And those at the bottom? All are "red states" with the worst score going to Dick Cheney's Wyoming, a perfectly dreaful 0. But there are remarkably low scores also for Alabama, Mississippi, Tennessee, Oklahoma, and so on. To make the symmetry rather complete, swing states are in the middle, with higher scores if they are in the North and lower if they are further south. Thus Missouri had an anemic score of only 4, and was 45th in the nation. The most northern swing state, New Hampshire, had the highest score among them, with 16.5, and came in 18th. Another northern swing state, Ohio, scored scored 16 and came in 19th.

These are not merely statistics. The states spent just under $3 billion on energy efficiency in 2007, almost four times what George Bush budgeted for it. In short, the states that supported Obama most strongly are also those most prepared to take advantage of any new energy programs.

There is one interesting exception to these generalizations, the State of Michigan. It ranks just 38th overall, in contrast to its more environmentally conscientious neighbors in the northern tier of the US. Center of the American car industry, Michigan seems wedded to energy profligracy.

November 12, 2008

How Accurate Were the Polls?

After the American Century

In the aftermath of the election, one can judge how accurate public opinion polls were. Real Clear Politics developed a useful poll of the polls, giving an average figure that combined all the various efforts to quantify the public mood. This proved quite accurate. On the eve of the election, this average was 52.1% for Obama, who actually received slightly more, 52.6% of all votes cast. McCain was predicted to receive 44.5% but actually got 46.1%. 

To put this another way, the poll of polls predicted a difference between the candidates of 7.6%. The actual difference was 6.5%. This could be considered an error of 1.1%, but some voters did change the minds during the last week of the contest, and this was a running average.

Which polling service did the best? None predicted a McCain victory. I hate to admit it, but FOX News predicted Obama by 7%. CNN also had Obama by 7%, while the PEW Trust concluded that the difference would be 6%. This suggests that however rabid the FOX news department may be, their polling experts do a good job. Less successful were Reuters and Gallup, as both predicted a massive Obama victory, with a margin of 11%. CBS News and ABC News gave Obama a 9% margin of victory - too much, but only 2.5% away from the correct result.

In terms of electoral votes, the polls also were pretty accurate. While John McCain tried hard to win in Pennsylvania, the polls kept saying that this was not going to happen. In fact, the race there was not particularly close. All the hype about the "Bradley Effect" proved mistaken. Likewise, the polls said Obama would likely win in Virginia, which he did, and that it was too close to call in North Carolina. In fact, Obama did win there, but by a margin of less than 1%. The polls were also right to say that Obama was leading in Florida, that he would take Colorado, New Mexico, and Nevada, and that the only swing state where McCain had a good chance was Missouri. In fact, we are still not absolutely certain he won there, but it appears that did did, by less than 8,000 votes. The poll of polls put McCain ahead by 0.1% - amazingly accurate.

On the whole, I suppose this is a good result, but one always hopes for a little bit of unpredictability to keep things interesting.

November 11, 2008

Bush's Email-gate

After the American Century

As President Bush prepares to leave Washington, we begin to think about his legacy. Unfortunately, full evaluation of his eight years in office may be difficult because he has not kept good records. In 2003 the White House was busy with many things, including the build-up to the Iraq War. The records from that year might be particularly interesting to historians, and they are crucial to understanding how the Bush government decided, mistakenly, that weapons of mass destruction were being hidden by Saddam Hussein. However, much of the email from that year, perhaps 225 days, may be lost. Electronic accident? or expunged?

The losses begin, conveniently enough, during the build-up to the Iraq War . The missing mail also includes records related to the CIA-leak case, in which White House personnel "outed" one of their own agents, apparently as political revenge. This led to the prosecution and conviction of "Scooter" Libby, one of Dick Cheney's closest aids.

Some email has also apparently disappeared for 2004 and 2005, perhaps as many as 5 million pages in all, according to CREW, a non-profit watchdog organization concerned with ethics in government. However, it is possible that all this material still exists in White House servers - but no one writing about this on the Internet seems to know. In fact, if all the emails are entirely lost from every server, that result almost required systematic record destruction

The Federal Records Act requires the preservation of all presidential papers, including emails. Yet it appears that George Bush and his team have been both careless in preservation and lax in recovery efforts. In contrast, the Clinton White House had an automatic archiving system that made copies of all emails. When the Bush team chose a new email system in 2002, however, they did not include automatic archiving. Instead, each email had to be manually renamed and saved. This sounds like a ludicrous, make-work program most of the time, but also it also potentially provides a chance to omit the damaging email now and again. But 225 days in one year? Perhaps 473 days in all? 5 million messages?

Such incompetence (or is it the intentional loss of damaging information?) may be hard to believe. But then these are Republicans. A Republican President, Richard Nixon, erased vital parts of the Watergate tapes. In the Irangate scandal, the Reagan White House, tried (unsuccessfully) to erase incriminating information as well. There is a pattern here, and it should more than embarrass the Republicans. There appear to be grounds for a criminal investigation, because the Bush Administration was aware of the problem already in 2002, but failed to fix it for six years. During most of the two Bush terms, many people may have been able to delete emails from their accounts or even from the servers. Historians will not be able to trust this partial record.

At the same time, Dick Cheney at times has been doing official business using a private email account. This is illegal because it skirts the legal requirements of the Federal Records Act, and makes it even easier to eliminate anything illegal, incriminating or embarrassing.

The Bush White House has systematically undermined the record keeping process. The legacy of these eight years is apparently rife with evasion and destruction of evidence. Will anyone be prosecuted?

For a chronology of this unfolding scandal and more information, go to The National Security Archive.